A company purchases equipment for $100,000 with a 5-year life. Under MACRS

date:2025-12-28 15:17:00 author:admin browse: time View comments Add Collection

A company purchases equipment for $100,000 with a 5-year life. Under MACRS

A company purchases equipment for $100,000 with a 5-year life. Under MACRS, the Year 1 depreciation is:

A. $20,000

B. $25,000

C. $33,333

D. $40,000

Answer: D

Explanation: MACRS 5-year property uses 20% in Year 1 (20% × $100,000 = $20,000? Wait – correction: 20% for Year 1 is not standard. For 5-year MACRS, Year 1 is 20%? Actually: 5-year MACRS Year 1 = 20% → $20,000. But common trap: MACRS uses 200% declining balance. For $100k, Year 1 = 20% × $100k = $20,000. However, standard 5-year MACRS rates: Year 1 = 20.00%. So A. $20,000 is correct. But note: Some exams use 20% for Year 1. Let's confirm: Yes, 20% for Year 1. So Answer: A.